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10x Organizational Structure
How to effectively leverage organizational machinery to maximize business outcomes?
What is organizational structure?
Organizational structure aligns and relates parts of an organization, so it can achieve the dual purpose of maximum sustained performance and extreme agility to respond to ever changing business landscape.. The structure chosen affects, in a high leverage way, an organization's success in carrying out its strategy and objectives.
On the surface, organizational structure provides guidance to all employees by laying out the official reporting relationships that govern the workflow of the company. A formal outline of a company's structure makes it easier to add new positions in the company, as well, providing a flexible and ready means for growth. But there are deeper considerations. There is no “one size fits all” approach as there are many types of structures bringing along with them advantages and disadvantages. The type of structure you choose depends a lot on leadership philosophy, type of business, competitive landscape, labor market, and company strategy. I want to suggest that none of these elements are static - so the focus of this newsletter is to understand how we might go about devising an organizational structure, when to revise it, and what metrics you should measure to understand its effectiveness and blind spots.
How to develop an organizational structure?
It starts with the vision. Vision, for the company, or for a sub organization, should set the context and drive alignment. A hallmark of a well-aligned organization is its ability to adapt and realign as needed. To target long-term viability, an organization must continually (re)adjust its structure to fit new economic realities without diminishing core capabilities and competitive differentiation. Organizational (re)alignment involves closing the structural gaps impeding organizational performance. While the rest of the discussion focuses on product organizations, the framework should serve as a good reference for anybody wrestling with this situation. When you’re setting out a new design for the organization, there are five parameters you should optimize for:
Clear ownership - Every product feature, sub feature, tasks, should have a clear (singular) owner. This is not to say you limit your scope to only tasks under your control. You should practice owning everything in your organization, to an ever expanding degree. It means you are responsible for not just those tasks which you directly control, but for all those that affect business outcomes. However, as far as accountability is concerned, there should be no ambiguity around who is responsible.
Rapid execution - Clarity in ownership when applied to bring similar skills/features/products together, it brings faster decision making as this allows for decision-making authority to be pushed to lower levels of the organization. This also paves the path for fostering a strong learning and collaboration.
Easy communication - As the organizations grow, the communication matrix becomes exponentially complex. While uptodate documentation is of supreme importance, it serves as a foundation for precise communication using well established terminologies and shared frameworks for project updates. As the projects have gotten more complex, more distributed in nature, virtual teams have become increasingly commonplace. With elements of remote/hybrid work, there is also fear of missing out, and feeling of not being included in the right forums. All of these issues (and many more) give rise to disengagement and ultimately to disconnected outcomes. Err on the side of over communicating. Practice transparency. Install processes in place to have reset meetings to reestablish shared understanding of goals. Encourage candid communication to uncover misalignment at the earliest possible moments.
Growth opportunities - There is a famous phrase that says “You’re either busing growing, or you’re busy dying!”. This is true for businesses, organizations, teams, and individual people. You’ve to build a structure that allows for growth opportunities along all of these dimensions. Business can grow through rapid innovations. You can foster a competitive differentiator by creating a great culture and enabling psychological safety so that the team can feel comfortable taking calculated risks. Each individual needs to have a clear charter that challenges him/her at the current level. Collectively the team should have scope and projects which accommodates individuals at various expertise levels to express their skills. And since the business is a perpetual motion machine, leaders need to look beyond the current set of projects/skills to establish a structure that allows for continuous growth.
Site equity - Most of the organizations are globally distributed. Back in the day when globalization was in its infancy, in order to cut costs, low skill jobs were outsourced. This was particularly true in the IT industry. After decades of progress throughout the world, education and opportunities have created a rather even field across the globe. As a result, a more progressive thinking is required when it comes to site strategy. It’s prudent to build fully functional teams (in tech, that would mean - Engineering, PM, DS, UX) delivering on their products rather independently tapping into the local talent pool as broadly as possible. You may further redesign your site strategy possibly by including additional sites, but always keep in mind, people/teams all across the world need to have inspiring work that will lead to meaningful growth for them.
When to revisit the organizational structure?
As mentioned before, the org structure is the mechanism through which you deliver on your vision. So naturally, whenever you redo your vision, you have to revisit your org structure to assess whether it’s still the most optimal way to deliver on your vision - if not, make the necessary changes.
As the business grows, the org will be launching new projects, and that’s another excellent reason to revisit the structure. New projects can be delivered through existing teams through new collaborations, OR you may need to form new teams possibly with new set of skills and new ways of collaborations.
Gone are the days when you started your career in one company and retired at the same company. Tech industry is particularly ruthless in disrupting existing norms that leads to frequent reinvention of jobs and careers for many people. For your business that means, leadership changes. Every leader brings along with him/her a set of strength and a few blind spots. These events are great moments to do a radical retrospective on possibly missed opportunities and see if a fresh org structure can yield better results.
No org structure is perfect, and despite your best intentions you may end up causing more harm than good. That’s why it’s very important to listen. Drive pulse survey to quantitatively track how well you’re charting against your goals of say psychological safety, communication pathways, project alignment, execution velocity, growth opportunities, site equity, and drive continuous improvements.
Finally, take time to clearly articulate your well intentioned rationale behind making the org changes, and really take your time to make sure that shared understanding permeates every corner of your organization. Most people are averse to changes, and it evokes feeling of anxiety - as leaders you have to address it with empathy and be that rock for the broader org.